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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

NOTE 1: Overview

The NHFB is a Commonwealth non-corporate entity under the PGPA Act and was established to support the obligations and responsibilities of the Administrator of the National Health Funding Pool.

The role and function of the NHFB are set out in the National Health Reform Act 2011.

In order to achieve our objectives, our primary functions are to assist the Administrator in:

  • calculating and advising the Commonwealth Treasurer of the Commonwealth’s contribution to public hospital funding in each State and Territory;
  • reconciling estimated and actual hospital services and adjusting Commonwealth payments;
  • undertaking funding integrity analysis to identify public hospital services that potentially received funding through other Commonwealth programs;
  • monitoring payments of Commonwealth, State and Territory public hospital funding into the Pool, including each State and Territory Pool Account;
  • making payments from each State and Territory Pool Account to each Local Hospital Network;
  • reporting publicly on National Health Reform Agreement funding, payments and services; and
  • developing and providing rolling three-year data plans to the Commonwealth, States and Territories.

1.1 Basis of preparation of the Financial Statements

The financial statements are general purpose financial statements and are required by s. 42 of the Public Governance, Performance and Accountability Act 2013. The financial statements have been prepared in accordance with:

  • Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FFR); and
  • Australian Accounting Standards and Interpretations – Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. The financial statements are presented in Australian dollars.

1.2. New Australian Accounting Standards

All new, revised, amended standards and/or interpretations that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material effect on the NHFB financial statements.

Application of AASB 16 Leases

NHFB adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. The application of AASB 16 was to recognise a new lease which commenced in January 2020 and therefore there is no implication for retained earnings for 2018-19.

NHFB elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.

1.3. Taxation

NHFB is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

1.4. Events After the Reporting Period

There are no events after the reporting period affecting the financial statements.

NOTE 2: Expenses

NOTE 2: Expenses

2020
$

2019
$

NOTE 2A: EMPLOYEE BENEFITS

Wages and salaries

2,231,900

2,001,501

Superannuation:

Defined contribution plans

254,940

203,498

Defined benefit plans

135,782

482,709

Leave and other entitlements

355,841

444,674

TOTAL EMPLOYEE BENEFITS

2,978,463

3,132,382

ACCOUNTING POLICY

The accounting policy for Employee Benefits is contained in Note 7 Employee Provisions.

NOTE 2B: SUPPLIERS

Goods and Services Supplied or Rendered

Consumables, printing and training

21,118

63,257

Contractors and Support Agreements (Shared Services)

1,491,853

1,633,568

Professional fees (Audit and Legal)

100,877

144,058

Travel

86,991

85,122

Other

37,152

24,815

TOTAL GOODS AND SERVICES SUPPLIED OR RENDERED

1,737,991

1,950,821

Other Suppliers

Minimum lease payments1

98,609

202,019

Workers compensation expenses

18,588

24,687

Total other supplier expenses

117,197

226,706

TOTAL SUPPLIER EXPENSES

1,855,188

2,177,528

1 NHFB has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

ACCOUNTING POLICY

Short-term leases and leases of low-value assets

NHFB has elected not to recognise right-of-use assets and lease liabilities for short-term leases of assets that have a lease term of 12 months or less and leases oflow-value assets (less than $10,000). The entity recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Settlement Terms for Suppliers

All payables are expected to be settled within 30 days. (2018-19: 30 days).

NOTE 3: Income

NOTE 3: Income

2020
$

2019
$

OWN-SOURCE OTHER REVENUE

NOTE 3A: RESOURCES RECEIVED FREE OF CHARGE

Remuneration of auditors

90,000

90,000

TOTAL RESOURCES RECEIVED FREE OF CHARGE

90,000

90,000

ACCOUNTING POLICY

Resources received free of charge

Resources received free of charge are recognised as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated.Use of those resources is recognised as an expense.Resources received free of charge are recorded as either revenue or gains depending on their nature.

NOTE 3B: REVENUE FROM GOVERNMENT

Appropriations

Departmental appropriations

6,015,958

5,378,000

TOTAL REVENUE FROM GOVERNMENT

6,015,958

5,378,000

ACCOUNTING POLICY

Revenues from Government

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the NHFB gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.

NOTE 4: Financial Assets

NOTE 4: Financial Assets

2020
$

2019
$

NOTE 4A: CASH AND CASH EQUIVALENTS

Cash on hand or on deposit

433,723

30,777

TOTAL CASH AND CASH EQUIVALENTS

433,723

30,777

ACCOUNTING POLICY

Cash and Cash Equivalents

Cash is recognised at its nominal amount. Cash and cash equivalents includes:

cash on hand; and

demand deposits in bank accounts with original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

NOTE 4B: TRADE AND OTHER RECEIVABLES

Good and Services receivables in connection with:

Goods and services

333,939

280,504

TOTAL GOODS AND SERVICES RECEIVABLES

333,939

280,504

Appropriations receivable:

Appropriation receivable

770,217

1,056,833

TOTAL APPROPRIATIONS RECEIVABLE

770,217

1,056,833

Other receivables:

GST receivable from the Australian Taxation Office

44,150

25,626

TOTAL OTHER RECEIVABLES

44,150

25,626

TOTAL TRADE AND OTHER RECEIVABLES (NET)

1,148,306

1,362,963

ACCOUNTING POLICY

Financial assets

Trade receivables, loans and other receivables that are held for the purpose of collecting the contractual cash flows where the cash flows are solely payments of principal and interest, that are not provided at below-market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.

Impairment of financial assets

Financial assets are assessed for impairment at the end of each reporting period. No indicators of impairment were identified.

NOTE 5: Non-financial Assets

NOTE 5: Non-financial Assets

Right-of-use Asset
$

Intangibles1

$

Total

$

NOTE 5: RECONCILIATION OF THE OPENING AND CLOSING BALANCES OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLES

As at 1 July 2019

Gross book value

1,631,986

1,631,986

Accumulated depreciation, amortisation and impairment

(24,900)

(24,900)

TOTAL AS AT 1 JULY 2019

1,607,086

1,607,086

Additions

2,159,065

936,176

3,095,241

Depreciation and amortisation

(181,568)

(337,453)

(519,021)

TOTAL AS AT 30 JUNE 2020

1,977,497

598,723

2,576,220

Total as at 30 June 2020 represented by

Gross book value

2,159,065

2,568,162

4,727,227

Accumulated depreciation, amortisation and impairment

(181,568)

(362,353)

(543,921)

TOTAL AS AT 30 JUNE 2020

1,977,497

2,205,809

4,183,306

1 The carrying amount of computer software is comprised of all internally generated software including WIP and software assets at cost.

No indicators of impairment were found for all Non-financial assets.

ACCOUNTING POLICY

Acquisition of assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate. Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring. The NHFB does not have any Property, Plant and Equipment (PP&E) assets and use of PP&E is paid for under the Memorandum of Understanding (MOU) as a supplier expense.

Asset recognition threshold

Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases costing less than $5,000 (excluding GST), which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total). The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located.

Right of Use (ROU) Assets

On initial adoption of AASB 16 NHFB did not have any leases requiring recognition of a right-of-use asset. A right-of-use asset was recognised in 2019-20 as a new sub-lease was entered into on 20 January 2020 with the Department of Health.

Intangibles

The NHFB’s intangibles comprise internally developed software for internal use which have a capitalisation threshold of $10,000.These assets are carried at cost less accumulated amortisation and accumulated impairment losses.The NHFB has three software assets valued at $2,205,809 which are amortised on a straight line basis over the anticipated useful life of 5 years.All software assets were assessed for indications of impairment.No indicators of impairment were identified.

Work in progress (WIP)

All non-financial assets not fully constructed at 30 June 2020 are recorded as work in progress and are valued at cost. Depreciation or amortisation will not commence until the project has been completed to a stage where it can provide service to the agency.The WIP balance at 30 June 2020 was $390,511.

Depreciation

Depreciable property, plant and equipment assets are written‐off to their estimated residual values over their estimated useful lives to the NHFB using in all cases, the straight line method of depreciation.

Software assets are amortised on a straight‐line basis over its anticipated useful life. Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date. Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

Depreciation rates applying to each class of depreciable asset are based on the following useful lives

2020

2019

RIGHT-OF-USE ASSET

Lease Term

INTANGIBLE ASSET

3-5 years

3-5 years

NOTE 6: Payables

2020
$

2019
$

NOTE 6A: SUPPLIERS

Trade creditors and accruals

492,441

474,804

TOTAL SUPPLIER PAYABLES

492,441

474,804

Suppliers expected to be settled within 12 months:

Related entities1

219,781

80,516

External parties2

272,660

394,288

TOTAL

492,441

474,804

Settlement was usually made within 30 days.(2018-19: 30 days)

NOTE 6B: OTHER PAYABLES

Wages and salaries

34,699

18,518

Superannuation

5,803

3,275

Leave provisions payable

89,583

4,744

Salary Sacrifice payable

6,396

5,277

TOTAL OTHER PAYABLES

136,481

31,814

1 For the period ended 30 June, amounts relate to payables to the Department of Health under shared services arrangements and some small payables to other Commonwealth government agencies.

2 For the period ended 30 June, amounts relate to suppliers, consultants and contractors.

ACCOUNTING POLICY

Financial liabilities are recognised and derecognised upon ‘trade date’. The NHFB’s financial liabilities are measured at nominal amounts. No fair value measurement disclosures are required.

NOTE 6C: LEASES

Lease Liabilities3

2,003,373

TOTAL LEASES

2,003,373

3 NHFB has applied AASB 16 using the modified retrospective approach and therefore the comparative
information has not been restated and continues to be reported under AASB 117.

NOTE 7: Employee Provisions

2020
$

2019
$

NOTE 7A:EMPLOYEE PROVISIONS

Leave

863,377

937,660

TOTAL EMPLOYEE PROVISIONS

863,377

937,660

NOTE 7B:OTHER PROVISIONS

Provision for restoration obligations

10,500

TOTAL OTHER PROVISIONS

10,500

ACCOUNTING POLICY

Liabilities for 'short-term employee benefits' (as defined in AASB 119 Employee Benefits) and termination benefits expected within twelve months of the end of the reporting period are measured at their nominal amounts. The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability. Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the NHFB is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees' remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the NHFB's employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for the long service leave has been determined by our best estimates based on the NHFB staff profile. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.The NHFB applies the shorthand method for calculation of LSL liabilities.

Superannuation

Staff of the NHFB are members of the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or employee nominated superannuation funds. The PSS is a defined benefit scheme for the Australian Government. The PSSap and employee nominated superannuation funds are defined contribution schemes.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported by the Department of Finance’s administered schedules and notes. The NHFB makes employer contributions to the employees’ superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. The NHFB accounts for the contributions as if they were contributions to defined contribution plans.

NOTE 8: Aggregate Assets and Liabilities

NOTE 8: Aggregate Assets and Liabilities

2020
$

2019
$

Assets expected to be recovered in:

Amounts recoverable from assets within 12 months

2,398,975

1,631,537

More than 12 months

3,407,919

1,369,289

TOTAL ASSETS

5,806,894

3,000,826

Liabilities expected to be settled in:

No more than 12 months

1,164,835

709,531

More than 12 months

2,341,337

734,747

TOTAL LIABILITIES

3,506,172

1,444,278

NOTE 9: Contingent Assets And Liabilities

QUANTIFIABLE CONTINGENCIES

As at 30 June 2020, the NHFB had no quantifiable contingencies. (2018-19: None).

UNQUANTIFIABLE CONTINGENCIES

As at 30 June 2013, the NHFB had entered into an arrangement for an indemnity with the New South Wales Health Administration Council (HAC).No change has occurred during 2013-14 through to 2019-20 and remains current as of 30 June 2020.

The HAC is a statutory body whose functions include entering into contracts to support the functions of the NSW Minister for Health. HAC has a banking contract for its Pool accounts with the RBA. HAC has provided the RBA with an indemnity that places obligations upon HAC to accept risks on persons not in its direct control, being the staff of the NHFB. The HAC has in turn sought a 'back to back' indemnity from the Commonwealth. The indemnity is limited to cover the actions of NHFB staff in their capacity as users of Pool account information.

The most probable cost of the indemnity if called upon would be over $20,000,000 (inclusive of GST).

A risk assessment has been undertaken in accordance with Department of Finance Guidelines, (Financial Management Guidance No.6, Guidelines for Issuing and Managing Indemnities, Guarantees, Warranties and Letters of Comfort September 2003). The contingent liability includes risks which are assessed as being significant or non-remote. The NHFB will make every effort to limit the risk to the Commonwealth under the arrangement through the adoption and implementation of appropriate risk management procedures.

Under the National Health Reform Agreement (NHRA), each of the States agreed to open a Reserve Bank of Australia (RBA) account (a 'State pool account') for the purpose of receiving all Commonwealth and activity-based State public hospital funding. The Administrator of the National Health Funding Pool (the Administrator) is responsible for making payments from each State pool account,at the direction of each State Health Minister. This process is supported by the NHFB.

SIGNIFICANT REMOTE CONTINGENCIES

As at 30 June 2020, the NHFB had no significant remote contingencies. (2019: Nil)

ACCOUNTING POLICY

Contingent assets and liabilities are not recognised in the balance sheet but are reported in this note. They may arise from uncertainty as to the existence of an asset or liability, represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.

NOTE 10: Key Management Personnel Remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the NHFB, directly or indirectly. The NHFB has determined the key management personnel to be the CEO and the Administrator. Key management personnel remuneration is reported in the table below:

2020
$

2019
$

Short-term employee benefits:

Salary

423,274

404,558

Other

35,908

42,807

TOTAL SHORT-TERM EMPLOYEE BENEFITS

459,182

447,365

Post-employment benefits:

Superannuation

55,238

47,448

TOTAL POST-EMPLOYMENT BENEFITS

55,238

47,448

Other long-term benefits:

Long-service leave

14,482

11,098

TOTAL OTHER LONG-TERM BENEFITS

14,482

11,098

TOTAL EMPLOYMENT BENEFITS

528,902

505,911

Notes:
The total number of key management personnel that are included in the above table is two (2018-19: 2).

The above key management personnel remuneration excludes the remuneration and other benefits of the Responsible Minister. The Responsible Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the NHFB.

NOTE 11: Related Party Disclosures

Related parties for the NHFB are the Key Management Personnel, the Portolio Ministers, and other Australian Government entities. Significant transactions with related entities include the purchase of goods and services and payments in relation to a Memorandum of Understanding for shared services.

No payments were made outside of the normal course of business. There are no related party transactions by Key Management Personnel or Ministers requiring disclosure.

NOTE 12: Financial Instruments

NOTE 12: Financial Instruments

2020
$

2019
$

NOTE 12A: CATEGORIES OF FINANCIAL INSTRUMENTS

FINANCIAL ASSETS

At amortised cost:

Loans & Receivables

Cash & Equivalents

433,723

30,777

Trade and other receivables

333,939

280,504

TOTAL

767,662

311,281

CARRYING AMOUNT OF FINANCIAL ASSETS

767,662

311,281

FINANCIAL LIABILITIES

At amortised cost:

Trade creditors and accruals

492,441

474,804

TOTAL

492,441

474,804

CARRYING AMOUNT OF FINANCIAL LIABILITIES

492,441

474,804

NOTE 12B: NET INCOME AND EXPENSE FROM FINANCIAL ASSETS

There is no income or expense from financial assets in 2019-20. (2018-19: Nil)

NOTE 12C: NET INCOME AND EXPENSE FROM FINANCIAL LIABILITIES

There is no net income or expense from financial liabilities in 2019-20. (2018-19: Nil)

NOTE 12D: FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of all financial assets and liabilities equals its carrying amount in 2019-20 and 2018-19.

ACCOUNTING POLICY

The NHFB classifies its financial assets as loans and receivables.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are recognised and derecognised upon trade date.

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at their nominal value less impairment.Trade and other receivables consisted wholly of receivables for employee entitlements within Government.

Effective Interest Method

Income is recognised on an effective interest rate basis.

Impairment of financial assets

Financial assets are assessed for impairment at the end of each reporting period. The NHFB did not impair any of its financial assets.

Financial liabilities

NHFB classifies its financial liabilities as other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’.

NOTE 13: FINANCIAL ASSETS RECONCILIATION

Notes

2020
$

2019
$

FINANCIAL ASSETS

TOTAL FINANCIAL ASSETS AS PER THE STATEMENT OF FINANCIAL POSITION

1,582,029

1,393,740

Less: non-financial instrument components:

Appropriations receivable

4B

770,217

1,056,833

GST Receivable from the Australian Taxation Office

4B

44,150

25,626

TOTAL NON-FINANCIAL INSTRUMENT COMPONENTS

814,367

1,082,459

TOTAL FINANCIAL ASSETS AS PER FINANCIAL INSTRUMENTS NOTE

767,662

311,281

NOTE 14: Appropriations

TABLE 14A: ANNUAL APPROPRIATIONS (RECOVERABLE GST EXCLUSIVE)

ANNUAL APPROPRIATION FOR 2020

Annual Appropriation
$

Section 741
$

Total appropriation
$

Appropriation applied in 2020
(current and prior years)2
$

Variance3
$

Departmental

Ordinary annual services

5,570,000

133,754

5,703,754

(5,990,370)

(286,616)

TOTAL DEPARTMENTAL

5,570,000

133,754

5,703,754

(5,990,370)

(286,616)

ANNUAL APPROPRIATION FOR 2019

Annual Appropriation
$

Section 741
$

Total appropriation
$

Appropriation applied in 2020
(current and prior years)2
$

Variance4
$

Departmental

Ordinary annual services

5,378,000

99,938

5,477,938

(6,781,065)

(1,303,127)

TOTAL DEPARTMENTAL

5,378,000

99,938

5,477,938

(6,781,065)

(1,303,127)

1 Section 74 retained receipts exclude GST refunds of $109,488 for 2020 and $291,313 for 2019.

2 Appropriation applied in 2020 of $5,990,370 includes $1,056,833 relating to the 2018-19 financial year (2019) undrawn appropriation.

3 The variance of $286,616 is due to the NHFB drawing down on its prior year appropriation during 2019-20 to pay its 2018-19 trade creditors and for additional capital projects undertaken during 2019-20.

4 The variance of $1,303,127 is due to the NHFB drawing down on its prior year appropriation during 2018-19 to pay its 2017-18 trade creditors and for additional capital projects undertaken during 2018-19.

TABLE 14B: DEPARTMENTAL AND ADMINISTERED CAPITAL BUDGETS (RECOVERABLE GST EXCLUSIVE)

There was no Departmental Capital Budget appropriated to the NHFB in 2019-20 (2018-19:nil).

TABLE 14C: UNSPENT ANNUAL APPROPRIATIONS (RECOVERABLE GST EXCLUSIVE)

Authority

2020
$

2019
$

DEPARTMENTAL

Appropriation Act (No 1) 2019-20

770,217

Appropriation Act (No 1) 2018-19

1,056,833

Appropriation Act (No 1) 2019-20 - cash at bank

433,723

Appropriation Act (No 1) 2018-19 - cash at bank

30,777

TOTAL

1,203,940

1,087,610

NOTE 15: Budgetary Reporting – Explanation of Major Variances

The following note provides high level commentary of major variance between budgeted information for the NHFB published in the Treasury's 2019-20 Portfolio Budget Statements (PBS) and the 2019-20 final outcome as presented in accordance with the Australian Accounting Standards for the NHFB. The budget is not audited.

An explanation for a major variance may not be provided where the item is considered immaterial in the overall context of the financial statements.

As a guide, variances are considered to be 'major' based on the following criteria:

the variance between budget and actual is greater or less than 10%; and

the variance between budget and actual is greater or less than 2% of total expenses or total own-source revenue; or

an item below this threshold but is considered important for the reader's understanding or is relevant to an assessment of the discharge of accountability and to an analysis of performance of an entity.

The Statement of Comprehensive Income has the following variances:

Employee benefits

Additional expenditure related to increased staffing requirements by the NHFB for the COVID-19 response between March and June 2020. Additional staff were engaged using a mixture of secondment arrangements and non-ongoing contracts.

Suppliers

Reduced supplier expenditure was offset by capital expenditure of $936k on the development of the National Health Funding Pool Payments System and the publichospitalfunding.gov.au website in the 2019-20 financial year.

Depreciation and amortisation

Additional amortisation of $181k was recognised against the Right of Use Asset under AASB 16: Leases. The remainder of the variance related to amortisation of capitalised assets during the 2019-20 financial year.

The Statement of Financial Position has the following variances:

Cash and Cash Equivalents

Cash and cash equivalents at 30 June 2020 were above initial budget expectation. On 30 June 2020, an amount of $150k was received from the Department of Health as an up-front advance for supplementary funding in relation to COVID-19 support activities. The remaining balance relates to appropriations drawn-down on 25 June 2020.

Computer Software

An amount of $936k was capitalised in 2019-20, which is attributable to the Payments System ($798k) and the publichospitalfunding.gov.au website ($138k). This is offset by related amortisation of $337k.

Right-of-use Asset and Lease Liability

With the introduction of AASB 16 Leases, the NHFB has recognised a Right of Use asset and a corresponding Lease liability in the 2019-20 financial year. The value of both the Right of Use asset and Lease liability were derived in line with Department of Finance Simple Lease Calculation Model and Resource Management Guide 110 Guide to implementing AASB 16 Leases.

Suppliers

The suppliers balance primarily relates to $213k payable to the Department of Health under the shared services and property lease Memorandum of Understanding. The remaining balance relates to additional accruals for contractor expenses.

Other Payables

The balance of Other Payables relates to the employee entitlement balances of staff who have transferred out of the NHFB, and invoices have not yet been received from the transferring agency.

Employee Provisions

Employee provisions remained steady between 2018-19 and 2019-20 however remains above budgeted expectations. This is due to reduced leave being taken throughout the 2019-20 financial year. Additional staff engaged to assist with the COVID-19 response were engaged using a mixture of secondment arrangements and non-ongoing contracts and have not impacted non-current employee provision entitlements.

The above explanations also explain the major variances in the Cash Flow Statement and Statement of Changes in Equity.

End of General Purpose Financial Statements.